10pc tax at source imposed on postal savings deposit interest
Monday, 13 August 2007
S M Jahangir
The government has imposed a 10 per cent tax at source of the interest income from the deposits with the state-run Post Office Savings Bank, effective from July 1, 2007.
The Income Tax wing of the National Board of Revenue (NBR) issued the circular in this connection last Wednesday, official sources said.
"The provision for deduction of a 10 per cent tax at source has been introduced through amending the Article 53F of the Income Tax Ordinance 1984 under the Finance Ordinance 2007," the circular said.
The NBR through issuing a statuary regulatory order (SRO) in July 28 last had announced that interest from the Post Office Savings Bank would be considered as 'taxable income', it added.
Under the new provision, the 10 per cent tax at source will be applicable for interest/ profit from both the existing instruments -- Ordinary Deposit and Fixed Deposit.
The circular, however, made it clear that the said tax would not be applicable for the interest or profit, which was due on or before June 30, 2007 but the investors did not withdraw the same.
Like other government-run savings instruments, the 10 per cent tax at source will be deducted from interest amounting to Tk 25,000 and above to be gained from the deposits with the Post Office Savings Bank, it added.
Recently, the government had imposed similar rate of tax at source on interest from its various savings certificate that came into effect from July 1, 2007.
Meanwhile, the total investment made by individuals and institutions through the government's savings instruments reached Tk 151.23 billion in fiscal 2006-07, official figures showed.
The volume was nearly Tk 2.0 billion higher than that of the previous years.
Due to such increased investment trend, the government's net borrowing through savings certificates exceeded its revised target by about Tk 13.74 billion in the last fiscal.
According to the official figures, the government's net borrowing from the system was recorded at nearly Tk 41.75 billion during FY 2006-07.
On the other hand, the government recently revised upward its net borrowing target to Tk 28 billion from Tk 26 billion for FY 2006-07, sources said.
The net official borrowing through savings instruments was recorded at 29.66 billion in FY 2005-06, they mentioned.
As a result, the government had to count an increased volume of interest in the last fiscal on account of servicing its internal debt.
It paid interest to the tune of Tk 49.24 billion in the last fiscal while the volume was nearly Tk 45 billion in the FY 2005-06.
The government has imposed a 10 per cent tax at source of the interest income from the deposits with the state-run Post Office Savings Bank, effective from July 1, 2007.
The Income Tax wing of the National Board of Revenue (NBR) issued the circular in this connection last Wednesday, official sources said.
"The provision for deduction of a 10 per cent tax at source has been introduced through amending the Article 53F of the Income Tax Ordinance 1984 under the Finance Ordinance 2007," the circular said.
The NBR through issuing a statuary regulatory order (SRO) in July 28 last had announced that interest from the Post Office Savings Bank would be considered as 'taxable income', it added.
Under the new provision, the 10 per cent tax at source will be applicable for interest/ profit from both the existing instruments -- Ordinary Deposit and Fixed Deposit.
The circular, however, made it clear that the said tax would not be applicable for the interest or profit, which was due on or before June 30, 2007 but the investors did not withdraw the same.
Like other government-run savings instruments, the 10 per cent tax at source will be deducted from interest amounting to Tk 25,000 and above to be gained from the deposits with the Post Office Savings Bank, it added.
Recently, the government had imposed similar rate of tax at source on interest from its various savings certificate that came into effect from July 1, 2007.
Meanwhile, the total investment made by individuals and institutions through the government's savings instruments reached Tk 151.23 billion in fiscal 2006-07, official figures showed.
The volume was nearly Tk 2.0 billion higher than that of the previous years.
Due to such increased investment trend, the government's net borrowing through savings certificates exceeded its revised target by about Tk 13.74 billion in the last fiscal.
According to the official figures, the government's net borrowing from the system was recorded at nearly Tk 41.75 billion during FY 2006-07.
On the other hand, the government recently revised upward its net borrowing target to Tk 28 billion from Tk 26 billion for FY 2006-07, sources said.
The net official borrowing through savings instruments was recorded at 29.66 billion in FY 2005-06, they mentioned.
As a result, the government had to count an increased volume of interest in the last fiscal on account of servicing its internal debt.
It paid interest to the tune of Tk 49.24 billion in the last fiscal while the volume was nearly Tk 45 billion in the FY 2005-06.